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Driving value2013 Automotive M&A Insights

In this issue

2 Welcome

3 2013 flash report

4 The road ahead

7 The year in review

12 Insights into regions

14 Analyzing industry segments

15 Who’s buying: Financial versus Trade Buyers

17 In conclusion

18 Contacts and marketing information

Driving value 2 2013 Automotive M&A Insights

Welcome

We are pleased to present Driving Value: 2013 Automotive M&A Insights, PwC’s annual review of mergers and acquisitions (M&A) activity and key trends impacting the global automotive industry. In this edition, we look at:

• The status of global automotive deal activity among vehicle manufacturers, suppliers, financiers, and other related sectors

• Key trends that impacted the deal market

• Transaction activity by sector and region

• Our perspective on the road ahead

This latest edition of Automotive M&A Insights is meant to serve only as a preface to the insights and observations that we can provide to drive successful transactions. M&A leaders in the automotive and financial sectors frequently turn to us for advice on potential transactions and the strategies underpinning those deals. Your feedback is important to us, and we welcome the opportunity to provide you with a deeper look into any of these trends that may be of benefit to your organization.

Paul G. Elie

U.S. Automotive Transaction Services Leader

[email protected]

+1 (313) 394 3517


Global automotive deal volume dropped

5% to 465

$22 billion 28% from 2012

in aggregate global automotive deal value

2013 Key trends at a glaceAutomotive

Average global automotive deal size of

$141million

Forecast global automotive assembly growth 2013

2020

3.9%

CAGR

2013 largest automotive deal:

Carlyle acquisition of DuPont Performance Coatings

billion

2013 North American automotive assembly

million units16.3

North America automotive M&A activity in 2013 was flat with 2012–

share of target deal volume24%

$12.1

Financial buyers global automotive

M&A activity was flat at 115 deals

in 2013 compared to 2012

3 of 4 global automotivemegadeals completed in 2013 were transacted locally in Asia

70%$4.9TOP 10 DEALSWERE IN ASIAN ASSETS

COMPONENT SUPPLIERS deal value was

– it’sHIGHEST YEAR

2ndGlobal cross-sector M&A declinedcompared to 2012

165 22local deals

cross-border deals

Source: Thomson Reuters and other publicly available resources.

Europe reclaimed the title as the most active region in global automotive M&A

9%


Today’s companies still face barriers on the road to long-term growth; however, we believe the automotive sector is on an upward trajectory, revving up now to drive future growth. PwC’s Autofacts expects the industry to add 25 million units of production between 2013 and 2020, for a compounded annual growth rate of 3.9%.

Automotive, along with the world at large, is changing at a fast pace. Never before has evolution occurred in such short periods of time. We see five emerging megatrends combining their collective pervasiveness to impact and influence the future of M&A activity--discussed in the following pages, and each of which, along with its corresponding considerations, has the potential to drive M&A activity for global sector participants—ranging from raw material procurement to final assembly.

To stay ahead of the pace of change and remain relevant in today’s ultra-competitive marketplace, companies must collaborate across the automotive network to anticipate any roadblocks on the horizon and plan in advance how best to topple them. In all likelihood, the strategies emerging from these collaborative planning sessions will involve M&A transactions. PwC has identified five Megatrends we believe will impact the future of the automotive industry over the next decade.

The road ahead

Demographics shiftsRecent surges in population are expected to slow, except Africa where growth remains prolific. Median age by region continues to rise allowing for more drivers. Income equality has grown in over 75% of Organization for Economic Co-operation and Development

(OECD) countries, including many emerging markets.

Automotive implicationsOn all fronts, young workers will change the organizational structure and labor practices of many employers, requiring more flexibility and incentives to attract and retain “millennials” to the industry and the epicenters in which the industry operates.

Demographic shifts

5%

1950 20502000

10%

15%

20%

25%

Source: UN report World Population Aging 1950-2050

8%

21%

10%

Proportion of the world population aged 60 years or more

Source: UN report, “World Population Ageing” (1950-2050) http://www.un.org/esa/population/publications/worldageing19502050/


Accelerating urbanization Currently, 50% of the world’s population lives in cities; by 2030, the UN projects that 4.9 billion people will be urban dwellers. By 2015, the United Nations (UN) estimates that there will be 22 mega-cities (populations over 10 million),

with 17 located in developing economies. Infrastructure will be strained, where new cities will rise rapidly and require investments to accommodate growth.

Automotive implicationsTechnology and innovation will be of utmost importance as private and public transportation models adjust to new mobility needs. Connectivity, including vehicle to vehicle and traffic management systems, will require significant infrastructure investments to facilitate new transportation networks.

Shifts in economic power

Western economic dominance is a relatively recent phenomenon, and we are now seeing a rebalancing of global economies. This realignment is triggering the transition

of growth countries from centers of production to consumption-oriented economies.

Automotive implicationsVehicle demand is shifting to ascending economies – a trend the industry is already addressing with an increased focus on emerging markets as mature territories concurrently near a saturation point.

Accelerating urbanization

Shift in global economic power

2015: Global megacities

Gross Domestic Product (GDP) of G7 and E7 countries at $US Purchasing Power Parity (PPP)

Source: UN Department of Economic and Social Affairs

Source: PwC Analysis

GDP

$138.2trillion

GDP$69.3trillion

GDP

2009

2050

$29.0 trillion GDP $20.9 trillion GDP

G7Group of 7 (G7):

Canada, France, Germany,Italy, Japan, UK and US

Canada, France, Germany,Italy, Japan, UK and US

E7

G7 E7

Group of Emerging 7 (E7): Brazil, China, India, Indonesia,

Mexico, Russia and Turkey.

Brazil, China, India, Indonesia, Mexico, Russia and Turkey.

Source: PwC Analysis.

8-Megacities 2015

5–<8 million

8–<10 million

≥ 10 million

Urbanpopulation

Lagos

Kinshasa

Jakarta

Bandung

Manila

Tokyo

Shenyang

Beijing

Seoul

Shanghai

Hong-Kong

Ho Chi Minh City

BangkokMadras

Bangalore

Mumbai

Jidda Riyadh

Paris

London

Rhine-Ruhr NorthMoscow

IstanbulRhine-RuhrTotal

BaghdadTeheran

Kabul

Lahore

DhakaDelhi

Wuhan Vittagong

HanoiPune Calcutta

Karachi

Ahm

TianjinLos Angeles

Mexico City

Bogota

Lima

Santiago

Abidjan

Buenos Aires

Belo Horizonte

São PauloRio de Janeiro

Luanda

Guatemala City

Source: UN Department of Economic and Social Affairs.

New York

TorontoToronto

Chicago


Climate change and resource scarcity

Demand for energy is forecasted to increase by as much as 50% by 2030, and water withdrawals by 40%. The impact of this could make traditional methods of manufacturing and commerce difficult or even impossible in

some places. Sustainable solutions will become at odds with the need for resources to drive growth.

Automotive implicationsClimate change and resource scarcity will drive Original Equipment Manufacturers (OEMs) and suppliers to rethink regional manufacturing and distribution strategies. Countries and regions will differ in related regulations, requiring adaptability in both technology and manufacturing models.

Climate change & resource scarcity

With a population of 8.3 billion people by 2030, we’ll need...

Source: National Intelligence Council’s report. “Global Trends 2030: Alternative Worlds” (December 2012) http://www.dni.gov/files/documents/GlobalTrends_2030.pdf

50%moreenergy

40%morewater

35%morefood

Source: National Intelligence Council: Global Trends 2030: Alternative Worlds.

Technological breakthroughs

Entirely new industries are being created, which could have a significant impact on the size and shape of the manufacturing and high-tech sectors. The internet, mobile devices, “big data,” cloud computing and other

breakthroughs will continue to change our world, and companies are grappling with how these factors will affect the consumer experience – and the business models supporting them.

Automotive implicationsOEMs and suppliers will need advanced manufacturing capabilities to leverage global platforms while still catering to local / niche preferences.

Technological breakthroughs

The rise of the ‘Internet of Things’

Source: Cisco’s Internet Business Solutions Group (IBSG) http://share.cisco.com/internet-of-things.html

6.3 billion

500 million

6.8 billion

12.5 billion

7.2 billion

25 billion

7.6 billion

50 billion

0.08 1.84 3.47 6.58

WorldpopulationConnected

devices

Connecteddevices

per person

Moreconnecteddevicesthanpeople

Source: Cisco Internet Business Solutions Group, April 2011.

2003 2010 2015 2020


The year in review

Global automotive

For the second straight year, 2013 saw automotive deal activity continue to decline—albeit at a far slower pace than in the previous year. At 465 transactions, 2013 deal volume was down by just 5% compared to the significant drop of 18% experienced in 2012 when volume fell from the 594 deals transacted in 2011 to 490. In 2013, the total aggregate disclosed value in the sector was approximately $22 billion—a decline of 28% from the 2012 disclosed value of approximately $30 billion.

2013 365 days, 465 deals, $22 billion total aggregate disclosed value

Disclosed deal value

Global automotive M&A deal volume & value2001–2013

Dis

clo

sed

dea

l val

ue ($

bn)

Deal vo

lume

UST facilitated investments Sovereign wealth investment Deal volume (R-axis)

Source: Thomson Reuters and other publicly available sources.

0

20

40

60

80

100

120

140

20132012201120102009200820072006200520042003200220010

100

200

300

400

500

600

700

$19

$35

$21$26

$41$49

$57

$46

$70

462

621588

515

584 594 604

549520

594

490465

$6

532

$45

$30$22$25

$32

Global Automotive M&A Deal Volume and Value 2001–2013

Source: Thomson Reuters and other publicly available resources


Automotive assembly

Historically, M&A activity has trended directionally consistent with automotive assembly volume. However, this trend has not continued over the last two years, primarily driven by slowed activity in Europe. While much of the last two years was centered on lingering questions of when Europe would turn itself around, 2014 appears to be the year where most regions will show year-over-year growth in assembly. As such, PwC maintains a positive outlook for a future increase in M&A activity with 2013 showing signs that the struggling European Union market is finally beginning its recovery.

Looking beyond the European Union, North America and the Developing Asia-Pacific regions are expected to continue expanding throughout 2014. Long-term, Autofacts expects the industry to add 25 million units of production between 2013 and 2020 for a compounded annual growth rate (CAGR) of 3.9%. That being said, there are underlying challenges that the industry is set to face, ranging from changing demographics to economic policies—challenges that are likely to drive M&A activity, as companies look for solutions to stay relevant, implement growth strategies and be compliant.

Global: Regional Assembly Topline Outlook 2014

Developing Asia-Pacific

North America

European Union

Developed Asia-Pacific

South America

Eastern Europe

Middle East & Africa (ME&A)

30.21m 17.03m 16.51m 13.37m 4.69m 3.88m 1.67m

Global Light Vehicle Assembly Outlook 2001–2020

Source: PwC Autofacts® 2014 Q1 Data Release, Thomson Reuters and other publicly available sources, PwC Analysis

Source: Autofacts Quarterly Forecast Update 2014 Q1 Data

Global light vehicle assembly outlook

Ass

emb

ly v

olu

mes

(mill

ions

)

Deal vo

lume

Automotive M&A deal volume (R-axis)

Source: PwC Autofacts 2014 Q1 Data Release, Thomson Reuters and other publicly available sources, PwC Analysis

20

30

40

50

60

70

80

90

100

110

20202019201820172016201520142013201220112010200920082007200620052004200320022001

53 55 56 5863 65

69

58

72

7983

8793

98102 104 106 108

462

621588

515

584 594 60466

549

532

520

75

594

490465

200

300

400

500

600

700

800

900

2013–2012 CAGR = 3.9%


Top 10 transactions—Vehicle manufacturers

Date effective Target name Target region

Acquiror name Acquiror region

% of Shares acquired

Value of transaction

($m)

Buyer type

1 19 Nov 2013 BAIC Motor Co Ltd Asia Daimler AG Europe 12 873 TRADE

2 26 Dec 2013 Changan PSA Automobiles Co Ltd Asia Chongqing Changan Auto

Co Ltd Asia 50 330 TRADE

3 01 May 2013 Aston Martin Europe Investindustrial SpA Europe 35 233 FIN

4 06 Dec 2013 Greenkraft Inc US Sunrise Global Inc US 100 141 TRADE

5 08 Oct 2013 Geely Automobile Holdings Ltd Asia GS Capital Partners VI Fund LP US 6 125 FIN

6 21 Jun 2013 New Flyer Industries Inc ROW Marcopolo SA ROW 20 116 TRADE

7 21 Oct 2013 Thor Industries Inc-Bus US ASV US 100 100 TRADE

8 21 Jun 2013 North American Bus Industries US New Flyer Industries Inc ROW 100 80 TRADE

9 27 Nov 2013 Agnita Ltd Asia CIAM Investment(BVI)Ltd Asia 42 35 FIN

10 01 Mar 2013 Daimler Buses NA-Certain Asts ROW New Flyer Industries Inc ROW 100 28 TRADE

Top 10 transactions—Component suppliers





($mil)

Buyer type

1 04 Feb 2013 DuPont Performance Coatings US Carlyle Group US 100 4,900 FIN

2 12 Mar 2013 Fawer Automotive Parts Co Ltd Asia Guangdong Sunrise Holdings Asia 100 1,428 TRADE

3 24 Jul 2013 Indomobil Sukses Internasional Asia Gallant Venture Ltd Asia 82 1,258 FIN

4 04 Jul 2013 Hankook Tire Co Ltd Asia Hankook Tire Worldwide Co Ltd Asia 20 1,115 TRADE

5 01 Dec 2013 Visteon -Automobile JV Assets Asia Huayu Automotive Systems Co Ltd Asia 100 928 TRADE

6 05 Jun 2013 Pirelli & Co SpA Europe Multiple Acquiror Europe 7 548 FIN

7 04 Jul 2013 Gestamp Automocion SL-Assets US Mitsui & Co Ltd Asia 30 394 TRADE

8 11 Jan 2013 Visteon-Climate Control Bus US Halla Climate Control Corp Asia 100 368 TRADE

9 12 Jun 2013 WET Automotive Systems AG Europe Gentherm Europe GmbH Europe 95 345 TRADE

10 10 May 2013 Shriram Transport Fin Co Ltd Asia Piramal Enterprises Ltd Asia 10 301 TRADE

Top 10 deals


Top 10 transactions—Others (includes; retail, aftermarket, rental/leasing and wholesale, etc.)





($mil)

Buyer type

1 01 Apr 2013 Exego Group Pty Ltd Asia Genuine Parts Co US 70 810 TRADE

2 16 Dec 2013 Rhiag Inter Auto Parts Italia Europe Apax Partners LP Europe 100 765 FIN

3 29 May 2013 WBL Corp Ltd Asia UE Centennial Venture Pte Ltd Asia 58 595 FIN

4 14 Mar 2013 Zipcar Inc US Avis Budget Group Inc US 100 512 TRADE

5 01 May 2013 Sator Holding BV Europe Euro Car Parts Ltd Europe 100 268 TRADE

6 17 Jan 2013 Toyota Motor Philippines Corp Asia GT Capital Holdings Inc Asia 30 218 FIN

7 09 Dec 2013 Multiple Targets US Group 1 Automotive Inc US 100 208 TRADE

8 18 Jan 2013 WBL Corp Ltd Asia The Straits Trading Co Ltd Asia 24 180 TRADE

9 20 Dec 2013 Westport Axle Corp US Universal Truckload Svcs Inc US 100 123 TRADE

10 21 Feb 2013 Shriram Transport Fin Co Ltd Asia Sanlam Emerging Markets Ppty ROW 4 112 FIN

Average Deal Size

The average disclosed deal size during 2013 was $141 million, representing a 12% decrease over the 2012 average size of $161 million. Given that only four megadeals (>$1 billion) were transacted during 2013—its lowest level experienced over the last six years—small and mid-sized deals continue to dominate the global automotive M&A landscape.

Global Auto M&A Deals by Disclosed Value 2008–2013

Source: Thomson Reuters and other publicly available sources

0

50

100

150

200

250

300

201320122011201020092008

<100 mn

Global Auto M&A Deals by Disclosed Value2008–2013

100 mn—1 bn >1 bn


117147176147135175

33

35

58

2413

31

4

613

$2837

7

6

Average Deal Size (R-Axis)

Dea

l Vo

lum

e o

f D

iscl

ose

d D

eal V

alue

Averag

e Disclo

sed D

eal Value ($mn)

0

50

100

150

200

250

300

350

400

$149 $140

$186$161

$141


Cross-Sector M&A

The Automotive sector fared better than global cross-sector M&A activity in 2013 which declined by 9% compared to 2012. While this marks the slowest year of deal activity since 2004, deal value stayed relatively flat at $1.94 trillion.

Global Cross-Sector M&A Deal Volume & Value 2001–2013



Global cross-sector M&A deal volume & value2001–2013

Dis

clo

sed

dea

l val

ue ($

trn) D

eal volum

e (thousand

s)

Deal volume (R-axis)


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

20132012201120102009200820072006200520042003200220010

5

10

15

20

25

30

35

40

45

$2.14

$1.28 $1.19

$1.55

$2.21

$2.88

$3.88

$1.79

25.8

22.1

24.026.8

30.0

33.9

38.837.5

33.0 32.2 30.7

28.030.8

$2.28$1.99 $1.94$1.89

$2.83


Insights into regionsEurope

After six consecutive years of assembly and sales contraction in the region, Europe finally began to show signs of growth. In our view, this was primarily driven by a stronger-than-expected second half of the year for a number of countries. With year-over-year (YoY) assembly growth of approximately 4.0% in 2013 signaling the start of a slow recovery in the region over the mid- to long-term range, Autofacts predicts that the European markets are beginning to turn around.

Following two back-to-back periods of decline, the European M&A markets have already begun to show signs of recovery, with an increase in its share of deal volume both as an acquiror and target region compared to 2012. Once again, Europe was the most active region in automotive M&A, having transacted 165 local and 22 cross-border deals. Nevertheless, disclosed deal value in the region experienced a significant drop; notably, net investments in Europe were only $511 thousand in 2013 compared to $1.3 million in 2012. Further, the disclosed value of local deals, which has historically been greater than $10 billion, reached only $1.4 billion—which we primarily attribute to megadeals in 2012 and 2011.

Given the abundance of distressed suppliers in the region, the M&A markets have begun to react to favorable valuations, but continued growth will depend on the loosening of the credit markets and an improvement in overall economic environment.

North America

US investments have leveled off since the resurgence in 2012 from the 2008–2009 Great Recession. At 24%, the US share of deal volume by target region was flat in 2013, while its share of deal volume by acquiror region slipped slightly from 27% in 2012 to 25% in 2013. In all, 95 local and 19 inbound deals were transacted in 2013 compared to 99 and 20, respectively, in 2012. On the other hand, US cross-border investments (historically in the European region) were down 32% from 2012 levels.

From an assembly and sales perspective, all the North American markets saw strong results in 2013, with light-vehicle sales reaching 15.5 million units and with the US recording increases in sales of over

one million units for the fourth straight year. In 2013, for the first time since 2002, North American assembly cleared 16 million units. Autofacts expects continued growth for the region in the short- to long-term range, but this expansion may not necessarily translate into higher levels of M&A activity. After the painful capacity rightsizing that was completed during the economic downturn, companies, on the whole, are operating at consistent and stable levels, thereby reducing the likelihood of increased M&A activity.

Asia

Asia transacted the largest volume and value of outbound deals in 2013, with approximately 58% being in European assets. Three of the four megadeals completed in 2013 were transacted locally in Asia, representing part of the 90 local deals with an aggregate deal value of $8.01 billion. Asia’s 25% share of volume—both as a target and acquiror region—was more in-line with historical levels, after having reached historic highs in 2012.

Looking at the region in terms of maturity level, the Developed Asia-Pacific markets of Australia, Japan, and South Korea are all experiencing contraction, with a number of compounding factors leading to a smaller automotive base. With the rise in labor costs and with nearby markets offering more cost-effective assembly solutions, automotive manufacturing is nearly extinct in Australia. South Korea and Japan are both facing aging, declining populations that are simultaneously more urbanized, causing a dip in overall demand within the automotive sector. Given these circumstances, we are less likely to see M&A activity in these mature markets.

Meanwhile, the emerging markets of China, India, and Association of Southeast Asian Nations (ASEAN1) countries continue to rapidly expand, with manufacturers and suppliers alike hoping to increase their footprint in these areas. Joint ventures and new market entries continue to strive for optimal utilization levels while maximizing recently-installed capacity, which is leading to a lower level of M&A activity overall. However, since the developing markets in Asia will remain as long-term centers of growth for the global industry, we expect this plateauing of activity to be short lived.

1 Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore. Thailand, Vietnam


Share of Deal Volume by Acquiror Region 2008–2013

Share of Deal Volume by Target Region 2008–2013

Source: Thomson Reuters and other publicly available sources Source: Thomson Reuters and other publicly available sources

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

201320122011201020092008

9%

24% 25% 27% 27% 33% 25%

27% 24% 20% 23% 27% 25%

40% 39% 46% 41% 31% 40%

9%7% 9% 10%12%

Europe

Share of deal volume by acquiror region2008–2013

US Asia Row


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

201320122011201020092008

Europe

Share of deal volume by target region2008–2013

US Asia Row


8% 10% 4% 7% 8% 8%

24% 23%31% 28% 32% 25%

26% 25% 20% 22%24%

24%

42% 42%45% 43%

36%

43%

USLocal: 95 deals, $6.45 billionInbound: 19 deals, $1.20 billionOutbound: 23 deals, $1.91 billion

Asia (Asia & Oceania)Local: 90 deals, $8.01 billionInbound: 24 deals, $2.24 billionOutbound: 24 deals, $1.93 billionRest of the World

Local: 25 deals, $0.60 billionInbound: 12 deals, $0.20 billionOutbound: 21 deals, $0.31 billion

EuropeLocal: 165 deals, $1.40 billionInbound: 35 deals, $1.63 billionOutbound: 22 deals, $1.12 billion


Analyzing industry segmentsIn 2013, deal activity among the categories has shifted away from Vehicle Manufacturers and Components Suppliers towards Others—including retail/dealership, aftermarket, rental/leasing and wholesale, etc. Vehicle Manufacturers and Components Suppliers experienced steep drops in deal volume (28% and 14%, respectively) compared to 2012, while the Others category saw deal volume increase by 23%.

We see the sharp decline in Vehicle Manufacturers as being largely driven by the slow-down in activity within Asia, which historically has been the largest target region within the category. Component Suppliers experienced a volume decline of 14% in 2013 compared to 2012 but, on a positive note, deal value soared to its second highest year, hitting $12.1 billion—a rise driven in large part by the $4.9 billion Carlyle acquisition of DuPont Performance Coatings.

Vehicle Manufacturers M&A Activity 2008–2013

Others M&A Activity 2008–2013

Component Suppliers M&A Activity 2008–2013




Vehicle manufacturers M&A activity2008–2013

Dis

clo

sed

dea

l val

ue ($

bn)

Deal vo

lume

Porsche/VM transaction



74 86

97

70

0

10

20

30

40

50

60

70

80

90

100

91

0

20

40

60

80

100

120

201320122011201020092008

56

88.2

15.712.1

15.4

6.3

8.9

4.8


Others M&A activity2008–2013

Dis

clo

sed

dea

l val

ue ($

bn)

Deal vo

lume



261

157

0

5

10

15

20

25

0

50

100

150

200

250

300

350

201320122011201020092008

151

193205

$14.1

287

$4.3

$8.3

$19.2

$5.9$4.9


Component suppliers M&A activity2008–2013

Dis

clo

sed

dea

l val

ue ($

bn)

Deal vo

lume



214

303

236

202

0

5

10

15

20

25

278

0

50

100

150

200

250

300

350

201320122011201020092008

189

$19.6

$11.6

$4.4

$10.2$9.2

$12.1


Who’s buying:Financial versus Trade BuyersFinancial buyers’ activity in 2013 was flat with that seen in 2012, while trade buyers’ deal volume continued to fall from the highs experienced in 2011. Financial buyers’ deal value of $9.2 billion was more in line with 2010 and 2011 levels, representing a 119% increase from 2012. This increase in deal value comes after a sharp decline in value ($9.5 billion) in 2012 compared to 2011. Again, we attribute this primarily to the Carlyle $4.9 billion acquisition.

Trade Buyers M&A Activity 2008–2013

Financial Buyer Share of M&A Activity 2008–2013

Financial Buyer M&A Activity 2008–2013



Trade value

Trade buyers M&A activity2008–2013

Dis

clo

sed

dea

l val

ue ($

bn)

Deal vo

lume

Trade volume (R-axis)


0

5

10

15

20

25

30

35

0

50

100

150

200

250

300

350

400

450

500

201320122011201020092008

373

431

$434

379350

366

$27.2$26.1

$14.8

31.2

$26.1

$12.5

Financial buyer share of total value

Financial buyer share of M&A activity2008–2013

Sha

re o

f M

&A

act

ivit

y


Financial buyer share of total volume

0

10

20

30

40

50

60

70

80

0

5

10

15

20

25

30

35

201320122011201020092008

24%

21%

30%

14%

27%25%

31.2

78%

17%

40%

27%

42%

Financial value

Financial buyer M&A activity2008–2013

Dis

clo

sed

dea

l val

ue ($

bn)

Deal vo

lume

Financial volume (R-axis)


0

10

20

30

40

50

60

70

80

90

100

0

20

40

60

80

100

120

140

160

180

201320122011201020092008

117118

$13.7

141

115

$94.7

166

$5.5 $10

160

$9.2$4.2


Trade Buyer–Share of Deal Volume by Category 2008–2013

Financial Buyer–Share of Deal Volume by Category 2008–2013

Trade Buyers–Share of Deal Volume by Target Region 2008–2013

Financial Buyer–Share of Deal Volume by Target 2008–2013





0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

201320122011201020092008

Vehicle manufactures

Trade buyer—share of deal volume by category2008–2013

Component suppliers Others


40.3

30.6

14%22%

15%18%

11.514%

25.4

27.144%

46%54%56%

36%38%

24.633.5

8.842%32%31%27%52%48% 9.7

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

201320122011201020092008

Vehicle manufactures

Financial buyer—share of deal volume by category2008–2013

Component suppliers Others


40.3

30.6

18%14%14%

17%

8%13%

25.4

27.142%

54%

43%

48%

34%

42%

24.633.5

8.840%32%44%35%58%46% 9.7

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

201320122011201020092008

Europe

Trade buyers—share of deal volume by target region 2008–2013

US Asia Row


8%

26%34% 31% 35% 26%27%

24%

42% 39% 42% 41%37%

42%

26% 21% 21%21%

24%

9% 3% 7% 7% 8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

201320122011201020092008

Europe

Financial buyers—share of deal volume by target region 2008–2013

US Asia Row


8%

17%21% 19% 20% 20%13%

35%

44%49%

55%48%

35%

46%

23% 18% 26% 36% 27%

10% 6% 8% 9% 7%

During 2013, financial buyers continued to focus most of their efforts on the Component Suppliers and Others categories. However, Vehicle Manufacturers did see a slight increase in its share of financial buyers’ deal volume compared to 2012.

In line with the overall trends seen in 2013, financial buyers—on seeing their share of deal volume recover to levels experienced in

2011—refocused their activity on Europe. Contrary to overall trends, financial buyers’ activity within Asia stayed consistent with 2012, but their activity within the US slowed, while trade buyers were more focused on Asia and Europe in 2013, particularly in the Component Suppliers and Others categories.


In conclusionThough the economic and regional challenges of the past several years has led to a lower level of M&A activity, we expect that continued investment in R&D for next-gen technologies and innovation, along with industry fragmentation, will ultimately drive M&A activity in the future.

These are the key factors that we anticipate will spark automotive M&A growth going forward:

• Strategic approach to mitigating the risk of developing megatrends

• High levels of liquidity on corporate balance sheets

• Strategic initiatives to expand market share and grow customer, technological and product portfolios

• Reemergence of Europe from economic collapse


Contact usTo have a deeper discussion about our point of view on automotive M&A, please contact:

Authors Automotive leadership

Automotive transaction services

Paul Elie US Automotive Transaction Services Leader

[email protected] +1 (313) 394 3517

Harry Gruits Director, Automotive Transaction Services


Christopher Becker Experienced Associate, Automotive Transaction Services


Richard Hanna Global Automotive Leader


Felix Kuhnert European Automotive Leader

[email protected] +49 (711) 25034 3309

Brian Decker U.S. Automotive Advisory Leader


Dietmar Ostermann Global Automotive Advisory Leader


Alexander Unfried Global Automotive Tax Leader

[email protected] +49 (711) 25034 3216

Humberto Tognelli Brazil

[email protected] +55 (11) 3674 3855

Damiano Peluso Canada


Leon Qian China

[email protected] +86 (10) 6533 2940

Tang Xun China

[email protected] +86 (21) 2323 3396

Steven Perrin France

[email protected] +33 (0)156 578 296

Martin Schwarzer Germany

[email protected] +49 (0) 69 9585 5667

Sanjeev Krishan India

[email protected] +91 (12) 4330 6017

Francesco Giordano Italy

[email protected] +39 348 1505447

Taizo Iwashima Japan


Jason Wakelam UK

[email protected] +44 (0) 77 1471 1133

Paul Elie US


Corporate finance

Automotive marketing and media relations inquiries

Damian Peluso Canada


Martin Schwarzer Germany

[email protected] +49 (0) 69 9585 5667

Marco Tanzi Marlotti Italy

[email protected] +39 (02) 8064-6330

Taizo Iwashima Japan


Darren Jukes UK

[email protected] +44 (20) 7804 8555

Mike Milani* US


Kristin McCallum Ritter Global and US Automotive Marketing Leader


Meghan Bested Automotive Marketing Manager


About PwC’s Automotive Practice

PwC’s global automotive practice leverages its extensive experience in the industry to help companies solve complex business challenges with efficiency and quality. One of PwC’s global automotive practice’s key competitive advantages is Autofacts®, a team of automotive industry specialists dedicated to ongoing analysis of sector trends. Autofacts provides our team of more than 4,800 automotive professionals and our clients with data and analysis to assess implications, make recommendations, and support decisions to compete in the global marketplace.

About the Transaction Services Practice

The PwC’s Transaction Services practice provides due diligence on both the buy and sell side of a deal, along with advice on M&A strategy, valuation, accounting, fi nancial reporting, and capital raising. For companies in distressed situations, we advise on crisis avoidance, fi nancial and operational restructuring and bankruptcy. With approximately 1,000 deal professionals in 16 cities in the US and over 6,000 deal professionals in over 90 countries, experienced teams are deployed with deep industry and local market knowledge, and technical experience tailored to each client’s situation. Our fi eld-proven, globally consistent, controlled deal process helps clients decrease minimize their risks, progress with the right deals, and capture value both at the deal table and after the deal closes.

About Autofacts®

Autofacts is a key strategic asset of PwC’s global automotive practice. Fully integrated with PwC’s more than 4,800 global automotive professionals, Autofacts provides ongoing auto industry analysis our clients use to shape business strategy, assess implications and support a variety of operational decisions. The Autofacts team also draws from the strengths of PwC’s marketing, sales and financial services groups to support other key areas of automotive companies’ functions. Since 1985, our market-tested approach, diverse service offerings and dedication to client service have made Autofacts a trusted advisor throughout the industry. For more information, visit www.autofacts.com.

“PwC was recognized as having the largest Transaction Advisory Services Practice by revenue. PwC was also named a “Vanguard” firm and recognized by Kennedy as having the highest breadth and depth of service capabilities”.

Source: Kennedy; “Transaction Advisory Consulting Marketplace Report

2009–2012”; © BNA Subsidiaries, LLC. Reproduced under license

Visit our automotive industry website at www.pwc.com/auto

*Corporate finance services in the US are provided through PricewaterhouseCoopers Corporate Finance LLC (“PwC CF”). PwC CF is owned by PricewaterhouseCoopers LLP, a member firm of the PricewaterhouseCoopers Network, and is a member of FINRA and SIPC. PwC CF is not engaged in the practice of public accountancy. US persons, please contact the FINRA registered representatives noted with an *.

All dollar amounts are expressed in US dollars, unless otherwise noted.

PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2014 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

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